Rennova Health, New Acquisition, Analysts Target Price, Potential Value

Transcription

1 Rennova Health, New Acquisition, Analysts Target Price, Potential Value Rennova Health, Inc. (OTCQB: RNVA) provides industry-leading diagnostics and supportive software solutions to healthcare providers, delivering an efficient, useful patient experience and superior clinical outcomes. Rennova Healthcare experienced a sudden spike in its volume right after announcing the signing of a definitive agreement for the acquisition of Tennova Healthcare, an acute care hospital in Jamestown Tenn. The transaction is likely to be completed by second quarter of 2018, subject to customary and regulatory approvals. Tennova Healthcare - Jamestown is a fully operational 85-bed facility including a 24/7 emergency department, radiology department, surgical center, and wound care & hyperbaric center. The purchase includes a 90,000-sq. Ft. hospital building on approximately 8 acres. This acquisition further demonstrates company commitment to expanding Rennova's rural hospital model to provide necessary services to patients while securing more predictable recurring revenues. This hospital is approximately 38 miles (less than a one-hour drive) from Rennova current hospital in Oneida and will benefit by receiving patients from Oneida that require operations and treatment not provided there. The synergy of management and services in a close geographic location creates numerous efficiencies for Rennova and will allow it to support a more significant number of health care providers and residents in the local area. Another primary driver of the company's revenue base is its wholly owned subsidiary Big South Fork Medical Center (BSFMC), which has already started to receive payments from private insurers. Received payments underscore the function of BSFMC billing process, which the company expects to receive payments from federal payer soon.

2 Opened on August 8, 2017, the unit offers services that include, 24/7 emergency and radiology service X-ray, CT scan, ultrasound, nuclear medicine and MRI amongst others. The hospital had annual revenues of about $12 million in 2015, a performance that Rennova expects to replicate this year. While RNVA continues to focus on its brand recognition as a healthcare facility operator, its diagnostic business, a vital source of revenue, is also experiencing significant growth. In fact, the College of American Pathologists has already taken note of the company s flagship Laboratory Epic Reference Labs Inc. for meeting the Laboratory Accreditation Program Standards for Accreditation. This is yet another testimony to the quality of services and accuracy that RNVA is offering. Moreover, the company remains on track to pick up a Medicare number that would enable payments from federal agencies, Medicare and Medicaid. Receipt of payments will end the significant investment and cash requirement to carry monthly costs to date. Following recent challenges and some tough choices as the company streamline its businesses and focus on the hospital opportunity, analysts believe that RNVA is at a critical inflection point and is well poised for a significant turnaround in The rural hospital market, with its Medicare, Medicaid and other preferred provider contracts, holds the key to company s future growth. RNVA is expanding preferred provider contracts for its laboratory services to ensure payment and are optimistic that it will see increased laboratory services revenues based on these additional contracts. Supportive software solutions such as electronic health records and laboratory information systems software, which encourage recurring revenues, continue to gain new customers and demonstrate opportunity. Keeping this into consideration, Rennova Health looks like an incredibly cheap buy at the current price and is expected to move to a level of $3.50 in next six months or so. About the Company: Rennova Health is a provider of diagnostics and supportive software solutions to healthcare providers. The company has three major verticals: clinical laboratory operations, Supportive software solutions and informatics operations. Its core business continues to be clinical laboratory blood and urine testing. It also delivers products and services, including laboratory diagnostics and healthcare technology solutions. Highlights from the third quarter of 2017 and other updates: Raised proceeds of $4.0 million from a private placement of convertible preferred stock

3 Opened the Big South Fork Medical Center in August, followed by receipt of a certification number from the Centers for Medicare and Medicaid Services ("CMS") after regional office licensure approval. Won an appeal in the Eleventh Circuit Court of Appeals in a lawsuit filed by Rennova against CIGNA for failure to pay claims for laboratory services Raised $9.0 million in a private placement of convertible notes and the restructuring of existing debt Update on proposed spin-off: On July 12, 2017, the Company announced plans to spin off its Advanced Molecular Services Group ("AMSG") as an independent publicly traded company by way of a tax-free distribution to Rennova stockholders. While this spin-off has not been completed at the end of September 2017 as planned initially there is no change in the plan to do so. The strategic goal of the spinoff is to create two public companies, each of which can focus on its own strengths and operational plans. Latest Quarter Financial position: Net revenues for the third quarter of 2017 were $1.4 million, compared with $41,362 for the third quarter of The increase was mainly due to the recognition of $0.6 million in revenues in the Hospital segment derived from the opening of the Big South Fork Medical Centre in August 2017, and $0.6 million in revenues from the Clinical Laboratory Operations segment. Net revenues in the Company's Supportive Software Solutions were $0.2 million for the third quarter of 2017, an increase of $0.2 million compared with the same period a year ago. The Company had a loss from operations of $5.2 million for the third quarter of 2017, a decline of $6.2 million compared with a loss from operations of $11.5 million for the third quarter of The decrease is due to the $5.0 million reduction in total operating expenses and the $1.4 million increase in net revenues. The Company had cash of $41,017 as of September 30, 2017, compared with cash of $75,017 as of December 31, After the close of the quarter, the Company raised $4.0 million in proceeds from a private placement of convertible preferred stock. Key risk factors and potential stock drivers: Any positive announcement related to the collection of accumulated and current receivables from its hospital will continue to remain near-term driver for the company. Also, company s ability to reach cash flow break-even would be a critical booster for investors and traders. Company's ability to maintain its liquidity and financial flexibility to fund its incremental capital requirements.

4 Also, the upcoming growth would entail fundraising. Therefore, if the company can grow at a pace that outstrips the value lost through dilution, then there s real potential for long-term return. RNVA s ability to acquire and incubate other healthcare companies as the sector consolidates. Stock Chart: Comments: On Wednesday February 21, 2018, RNVA was at $0.0054, on volume of 11M shares exchanging hands. Market capitalization is $ 30,453. The current RSI is In the past 52 weeks, shares of RNVA have traded as low as $0.01 and as high as $54 At $0.0054, shares of RNVA are trading below its 50-day moving average (MA) at $ and below its 200-day moving average (MA) at $2.93 The present support and resistance levels for the stock are at $ & $ respectively.

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